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I just took over as Controller for a small business with three partners.  Every year they would take out 100% of retained earnings, splitting it per their partnership agreement. They would sometimes take out cash from their joint bank account, crediting cash and debiting their individual balances. In 2023 two of them took out more cash than was in their balance, leaving debits on the liability side of the balance sheet. I'm trying to figure out if these deficits should be perhaps reclassed as a Loan To Shareholder, similar to lending money to a regular employee.

I just took over as Controller for a small business with three partners.  Every year they would take out 100% of retained earnings, splitting it per their partnership agreement. They would sometimes take out cash from their joint bank account, crediting cash and debiting their individual balances. In 2023 two of them took out more cash than was in their balance, leaving debits on the liability side of the balance sheet. I'm trying to figure out if these deficits should be perhaps reclassed as a Loan To Shareholder, similar to lending money to a regular employee.

I just took over as Controller for a small business with three partners.  Every year they would take out 100% of retained earnings, splitting it per their partnership agreement. They would sometimes take out cash from their joint bank account, crediting cash and debiting their individual balances. In 2023 two of them took out more cash than was in their balance, leaving debits on the liability side of the balance sheet. I'm trying to figure out if these deficits should be perhaps reclassed as a Loan To Shareholder, similar to lending money to a regular employee.

I just took over as Controller for a small business with three partners.  Every year they would take out 100% of retained earnings, splitting it per their partnership agreement. They would sometimes take out cash from their joint bank account, crediting cash and debiting their individual balances. In 2023 two of them took out more cash than was in their balance, leaving debits on the liability side of the balance sheet. I'm trying to figure out if these deficits should be perhaps reclassed as a Loan To Shareholder, similar to lending money to a regular employee.

I just took over as Controller for a small business with three partners.  Every year they would take out 100% of retained earnings, splitting it per their partnership agreement. They would sometimes take out cash from their joint bank account, crediting cash and debiting their individual balances. In 2023 two of them took out more cash than was in their balance, leaving debits on the liability side of the balance sheet. I'm trying to figure out if these deficits should be perhaps reclassed as a Loan To Shareholder, similar to lending money to a regular employee.

I just took over as Controller for a small business with three partners.  Every year they would take out 100% of retained earnings, splitting it per their partnership agreement. They would sometimes take out cash from their joint bank account, crediting cash and debiting their individual balances. In 2023 two of them took out more cash than was in their balance, leaving debits on the liability side of the balance sheet. I'm trying to figure out if these deficits should be perhaps reclassed as a Loan To Shareholder, similar to lending money to a regular employee.

I am not sure if there is a partnership agreement among the partners in your case, if there is! Look for the capital article, as usually in partnership entities capital is stated with each partner share of the capital. I believe, from internal audit perspective, there must be internal controls (governance) on partners cash withdrawals because cash is very important resource for any business, so over withdrawal could lead to cash deficiency then a need to take a loan (maybe) with interest of course (more expenses to the business) and the rest of the cash story. 

I see others reply useful as well,

I just took over as Controller for a small business with three partners.  Every year they would take out 100% of retained earnings, splitting it per their partnership agreement. They would sometimes take out cash from their joint bank account, crediting cash and debiting their individual balances. In 2023 two of them took out more cash than was in their balance, leaving debits on the liability side of the balance sheet. I'm trying to figure out if these deficits should be perhaps reclassed as a Loan To Shareholder, similar to lending money to a regular employee.

I am not sure if there is a partnership agreement among the partners in your case, if there is! Look for the capital article, as usually in partnership entities capital is stated with each partner share of the capital. I believe, from internal audit perspective, there must be internal controls (governance) on partners cash withdrawals because cash is very important resource for any business, so over withdrawal could lead to cash deficiency then a need to take a loan (maybe) with interest of course (more expenses to the business) and the rest of the cash story. 

I see others reply useful as well,

I just took over as Controller for a small business with three partners.  Every year they would take out 100% of retained earnings, splitting it per their partnership agreement. They would sometimes take out cash from their joint bank account, crediting cash and debiting their individual balances. In 2023 two of them took out more cash than was in their balance, leaving debits on the liability side of the balance sheet. I'm trying to figure out if these deficits should be perhaps reclassed as a Loan To Shareholder, similar to lending money to a regular employee.

I just took over as Controller for a small business with three partners.  Every year they would take out 100% of retained earnings, splitting it per their partnership agreement. They would sometimes take out cash from their joint bank account, crediting cash and debiting their individual balances. In 2023 two of them took out more cash than was in their balance, leaving debits on the liability side of the balance sheet. I'm trying to figure out if these deficits should be perhaps reclassed as a Loan To Shareholder, similar to lending money to a regular employee.

I just took over as Controller for a small business with three partners.  Every year they would take out 100% of retained earnings, splitting it per their partnership agreement. They would sometimes take out cash from their joint bank account, crediting cash and debiting their individual balances. In 2023 two of them took out more cash than was in their balance, leaving debits on the liability side of the balance sheet. I'm trying to figure out if these deficits should be perhaps reclassed as a Loan To Shareholder, similar to lending money to a regular employee.